Gold dips US $2 as oil falls

Gold dips US $2 as oil falls

Sydney: Gold slid US $2 in modest trade on Tuesday, dragged lower by a 2% fall in oil prices, while activity was thinned by a Japanese holiday and a steady dollar ahead of US final third-quarter GDP data.

With currencies steady, gold took its cue from falling oil prices that have all but eliminated any talk of inflation, typically an incentive to buy bullion, returning in the current economic climate.

Dealers said confirmation of a 0.5% fall in final US third-quarter GDP data later on Tuesday potentially could drive more investors into bullion, which has rallied 12% in just over two weeks as risk-averse investors seek out a safe haven to end a tumultuous 2008.

“If we see the US dollar resume more of its down trend on the back of those GDP numbers then gold could get a boost," said Commodity Warrants Australia chief analyst Toby Hassal.

Spot gold fell about $3 or 0.34 percent to $844.20 an ounce at 8:55am. COMEX gold futures for February were down 0.18% to $845.70 per ounce in after-hours trade. The greenback was little changed versus major currencies in early Tuesday trade after having rallied versus the yen a day ago after data showed Japanese exports slumping and a warning from the Bank of Japan the economy is likely to get worse.

It continued its trickle down against the euro as credit conditions eased, while worries over whether or not a bailout of US automakers would fix the economy persisted.

US crude for February delivery fell 59 cents to $39.32 a barrel after diving 6% on Monday.

The Tokyo Commodity Exchange was shut on Tuesday for a national holiday.

Spot platinum rose $6.50 to $851.50 an ounce, while spot palladium steadied at $171.00 an ounce.

Spot silver dropped to $10.77 an ounce from $10.81.